What Is Shamir Backup and SLIP39?

Welcome!

In this article, we will explain how Shamir Backup works. We will look at why it is one of the best ways to protect your crypto investments, compare the SLIP39 and BIP39 standards, and answer the question: “How can you protect your cryptocurrency from theft and sleep better at night?”

I will try to keep all the useful and important information short, clear, and easy to understand.

You will understand how Shamir’s scheme works and why this approach can be so useful.

Let’s get started!

A brief history of Shamir Backup

Shamir’s principle entered the world of cryptography in Israel in 1979. The author of this principle is Adi Shamir. He proposed a model known as Shamir’s Secret Sharing scheme.

Before it came to cryptocurrencies, this scheme was actively used for transmitting information in digital images and for protection against attacks in the AES algorithm (Advanced Encryption Standard).

This scheme has also been used in video watermarking and biometric authentication systems.

Still, the full potential of Shamir Backup is revealed specifically in crypto wallets.

The model was adapted for working with seed phrases in 2017. Today, it is actively used in modern crypto wallets and backup solutions such as Trezor Model T and CryptoTag Odin.

How Shamir protection works in SLIP39 (Satoshi Labs Improvement Proposal)

The basic idea behind secret sharing is that the security of a system becomes stronger when access is harder to obtain for any single person.

Let’s look at an example:

Imagine that you have a wallet with an enormous amount of Bitcoin and a recovery phrase that gives full access to this wallet to anyone who has it. In that case, an attacker only needs to obtain this one precious phrase to access your Bitcoin and leave you with nothing. Stories about this kind of crypto theft often appear in the headlines. Don’t want to become the next victim? Use the Shamir scheme!

If you use Shamir’s scheme, the key to your Bitcoin wallet is encrypted and distributed among several people. At the same time, none of these people has sole access to your Bitcoin. To open your Bitcoin wallet, several people need to cooperate and reach consensus.

For example, let’s say you want your relatives to have access to your Bitcoin wallet: your wife, child, aunt, and brother.

You can distribute the level of importance between them in this protection system and set the required number of “shares” needed to access the crypto assets.

Let’s assume your entire seed phrase is split into 5 parts, and 3 parts need to be combined to unlock access to the wallet. The distribution looks like this:

a) Wife – 1 share

b) Child – 1 share

c) Aunt – 1 share

d) Brother – 2 shares (the more shares a person has, the more trust we place in them)

Since 3 shares are required to unlock access, this can happen in several ways. Either your brother teams up with someone else, or your wife, child, and aunt combine their shares together, in which case nothing depends on your brother.

In this case, no attacker will be able to steal your Bitcoin by gaining access to just one of your relatives. A thief would have to deal with a much more complex system.

Obviously, the farther apart the password recovery shares are stored, the harder the recovery process becomes for an outsider. But this also creates several inconveniences, which we will discuss below.

Important: Under no circumstances will 2 shares be enough to open the wallet. Any number of shares below the required threshold — in our example, fewer than 3 shares — is useless.

From a mathematical point of view, Shamir’s protection model is excellent.

Interesting: Shamir’s scheme is somewhat similar to a Minyan and the practice of holding religious services in Judaism. According to the rules, at least 10 Jewish men must be gathered in one place to conduct certain rituals.

BIP39 vs SLIP39

In reality, these two principles are quite difficult to compare because they have different purposes. BIP39 is familiar to most regular users: it is a seed phrase that gives you access to a crypto wallet. The phrase itself cannot realistically be guessed, but in most cases it is stored in one single place, and access to your crypto wallet depends on several words written on one piece of paper.

By contrast, access to a crypto wallet protected with SLIP39 and SSSS (Shamir Secret Sharing Scheme) requires consensus between several elements in the system.

The advantages and disadvantages are clear. With BIP39, you are more mobile: you do not need to confirm every action through consensus between several people by bringing them together for transactions, payments, or wallet access.

With SLIP39, you may need to bring your trusted people together for each transaction. A hardware wallet is still used here. You can afford to lose it, break it, or have it stolen. The main thing is to make sure you always have access to the required number of “recovery shares”. Keeping these shares safe is your main responsibility.

Difficulties of using SLIP39: The harder it is to bring the recovery shares together, the better your wallet is protected from outside interference. But it is also important to understand that this storage model creates difficulties not only for scammers, but also limits your mobility.

This storage method is a good fit for people who believe in cryptocurrencies and want to keep them in a secure place while waiting for the right price to sell. For those who use their wallet frequently, BIP39 is usually the more practical option.

Another important feature of wallets with SLIP39 support is that they can be used for passing on your cryptocurrency as inheritance. In this case, you need to clearly explain to each of your relatives how they will be able to access your assets after your death.

Important advice: I recommend preparing a detailed plan for your relatives explaining how to access your cryptocurrency. Write it down on paper and hide it in a safe. This will save your family from having to involve outside help and take unnecessary risks.

Wallets that support SLIP39

Interestingly, Ledger, one of the most popular crypto wallet manufacturers, has not released a product with Shamir Backup support.

Conclusion

In this article, we have looked at what Shamir Backup is, how it works, and how it compares to the simpler and more familiar BIP39 standard.

The SLIP39 model for protecting and recovering a crypto wallet is not suitable for everyone because it has several clear drawbacks. The main downside of this approach is the need for consensus. However, as often happens, this same feature is also its main advantage.

Shamir Backup is a reliable and optimal option for long-term holders, while wallets with BIP39 are better suited for traders, although they are not as resilient in this specific security model.

In any case, choosing a crypto wallet is an important and responsible decision, and it is often best to rely on professionals.

FAQ

1. What is SLIP39?
   

SLIP39 is a crypto wallet protection and recovery standard based on Shamir’s Secret Sharing scheme.

2. What are the advantages and disadvantages of Shamir protection?
   

The clear advantage of a wallet with SLIP39 (SSSS) is its security and reliability. This is achieved by distributing access between several participants. With this approach, wallet access is available only to a trusted group of people and only if they agree to provide that access.

The disadvantage is the difficulty of making quick transactions “here and now”. For your on-chain activity, you need consensus, and this consensus has to be reached every time.

3. Who is a wallet with Shamir Backup best suited for?
   

A crypto wallet with SLIP39 is one of the best options for protecting your crypto, especially if you are a long-term holder. If you often move your cryptocurrency from your wallet to other accounts, a wallet with BIP39 may be a better fit. See the selection on our website.

4. Which wallets support SLIP39?
   

CryptoTag Odin and Trezor Model T are among the most popular wallets and backup solutions with Shamir Backup support. However, the list is not limited to these products. See wallets with Shamir Backup support.